Egypt ranks 167th in PwC’s Pay­ing Taxes 2018 re­port

The Daily News Egypt - - Business - By Ne­hal Samir

Egypt ranked 167th glob­ally, out of 190 coun­tries, ac­cord­ing to the World Bank (WB) and Price­wa­ter­house­Coop­ers (PwC)’s Pay­ing Taxes 2018 re­port, which rates coun­tries by ease of com­ply­ing with tax laws.

Pay­ing Taxes 2018 is one of the el­e­ments of the WB’s Do­ing Busi­ness 2018 study, in which Egypt ranked 128.

Us­ing the per­spec­tive of a medi­um­sized do­mes­tic man­u­fac­turer, Pay­ing Taxes looks at how the case study com­pany in­ter­acts with tax sys­tems in 190 economies around the world. It as­sesses not just the amount of taxes paid, but how long it takes the com­pany to meet its tax com­pli­ance obli­ga­tions. This in­cludes the time to pre­pare files and pay the main taxes, as well as the time taken to claim a VAT re­fund and to deal with a cor­rec­tion to a cor­po­rate in­come tax re­turn.

Glob­ally, “on av­er­age it takes our case study com­pany 240 hours to com­ply with its taxes, it makes 24 pay­ments, and has an av­er­age To­tal Tax and Con­tri­bu­tion Rate (TTCR) of 40.5%,” the re­port said.

Ac­cord­ing to the re­port, the Mid­dle East is still the eas­i­est re­gion in which to pay taxes. Mean­while, the re­gion con­tin­ues to have the low­est TTCR and time to com­ply, but it is, how­ever, the sec­ond hard­est re­gion for post-fil­ing.

The re­port stated that the forth­com­ing in­tro­duc­tion of VAT in some economies in the re­gion is ex­pected to af­fect fu­ture re­sults.

On the other hand, the re­port re­vealed that Africa is the high­est re­gion in terms of pay­ments, as an av­er­age of 35.4 pay­ments are made on the con­ti­nent, and has the sec­ond high­est TTCR and time to com­ply af­ter South Amer­ica, as Africa has an av­er­age TTCR of 47.1%, and it takes 285 hours to com­ply with the con­ti­nent’s taxes.

In Egypt, the case study com­pany took 392 hours to com­ply with its taxes (no change com­pared to last year’s re­port).

Mean­while, the re­port ex­plained that the cor­po­rate in­come tax takes an av­er­age of 69 hours to com­ply with, labour taxes take 165 hours, and con­sump­tion taxes take 158 hours, plac­ing Egypt among the 11 slow­est coun­tries in Africa in terms of tax com­pli­ance.

Egypt makes 29 pay­ments (no change from last year). Mean­while, it has a TTCR of 45.3% com­pared to 43.5% last year.

Ac­cord­ing to the study, labour taxes ac­count for 27.3% of Egypt’s to­tal tax con­tri­bu­tions, while profit and other taxes ac­count for 13.6% and 4.4% re­spec­tively.

The study ex­plained that the 29 pay­ments in­clude one profit tax, 12 labour taxes, and 16 other taxes.

In terms of the post-fil­ing pro­cesses for value added tax (VAT) and cor­po­rate in­come tax (CIT) re­turns, Egypt scores 26.6, down from 29.1 in the 2017 re­port.

Ac­cord­ing to the draft bud­get sent to par­lia­ment for ap­proval,which Daily News Egypt ob­tained a copy of, tax rev­enues tar­geted in fis­cal year (FY) 2018/19 in­creased by EGP 166.38bn to reg­is­ter at EGP 770.28bn, ris­ing from EGP 603.9bn in the FY 2017/18 bud­get, a 27.55% in­crease.

One of the most prom­i­nent tar­geted tax rev­enues in­crease was taxes on in­come, which ac­counts for EGP 45.5bn in the FY 2018/19 draft bud­get, an in­crease of 40% com­pared to EGP 32.4bn in the pre­vi­ous year.

On the other hand, the to­tal VAT rev­enues, which in­cluded both VAT and tax ta­ble rates (tax rate sched­ule), ac­counted for EGP 320.148bn in the FY 2018/19 bud­get, up from EGP 252.770bn in FY 2017/18.

The coun­try is tar­get­ing around EGP 58.524bn in rev­enues from tobacco taxes, ris­ing from the ex­pected rev­enues of EGP 51.452bn this fi­nan­cial year, which ends in June.

With re­gards to cus­toms du­ties taxes, the govern­ment aims to in­crease them by EGP 8.9bn to reach EGP 45.328bn in FY 2018/19.

More­over, bills and bonds tax rev­enues wit­nessed a huge in­crease of 52.2% to reach EGP 59.57bn in the FY 2018/19 draft bud­get,up from EGP 39.133bn in FY 2017/18.

Pre­dicted tax col­lec­tions from state in­sti­tu­tions, such as the Cen­tral Bank of Egypt,the Suez CanalAuthor­ity, and the Egyp­tian Gen­eral Pe­tro­leum Com­pany, reached EGP 168.2bn, up from EGP 142.946bn in the cur­rent fis­cal year.

Mean­while, ex­pected cap­i­tal move­ment tax rev­enues in the FY 2018/19 bud­get reached EGP 30.865bn, which al­most dou­bled from EGP 16.766bn in the FY 2017/18 bud­get.

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